BERLIN (Reuters) – Activity in Germany’s service sector contracted in August for the first time this year, final results from the HCOB monthly survey showed on Tuesday.
The services sector PMI fell to 47.3 in August from 52.3 in July, in line with early estimates.
It goes below the threshold of 50 which separates contraction and growth in activity.
Businesses reported a sustained weakening of demand amid economic uncertainty and strong inflationary pressures.
“Something strange is happening in the German service sector: activity is slowing down, but prices are rising,” remarked Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
According to him, the explanation probably lies in the strong wage increases, which weigh on activities dependent on the workforce.
The outlook for businesses in the services sector rose slightly, but remained historically weak, resulting in near stagnation in job creation.
The composite PMI, which includes services and manufacturing, remained in contraction territory, falling from 48.5 in July to 44.6 in August, its lowest level since May 2020, and against a first estimate of 44.7.
“Some hoped that the services sector could stabilize the whole economy to some extent. This optimism proved to be short-lived,” noted Cyrus de la Rubia, who forecasts a contraction in gross domestic product of 0. .8% in the third quarter.
(Maria Martinez, Corentin Chapron, edited by Blandine Hénault)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
